The number of Americans who signed contracts to buy homes fell in August, after a weaker-than-expected peak buying season.
The National Association of Realtors said Thursday that its index of sales agreements fell 1.2 percent last month to a reading of 88.6
A reading of 100 is considered healthy. The last time the index reached that level was in April 2010, the final month that buyers could qualify for a federal tax credit that has since expired.
Contract signings are usually a reliable indicator of where the housing market is headed. There's typically a one- to two-month lag between a contract and a completed deal.
But the Realtors group said a growing number of buyers have canceled contracts after appraisals showed the homes were worth less than the buyers had bid. A sale isn't final until a mortgage is closed.
Home loans are also harder to come by. Many lenders are requiring 20 percent down payments and strong credit scores to qualify.
The pace of sales for previously occupied homes is slightly above last year's 4.91 million sold, the fewest since 1997. In a healthy economy, Americans would buy roughly 6 million homes each year.
In August, sales of new homes fell for a fourth straight month. This year is shaping up to be the worst for new-home sales on records dating to 1963.
Even so, homes are the most affordable they've been in decades. Mortgage rates are at six-decade lows. Prices in some metro areas have been cut in half. Still, sales in most areas remain weak.
The number of people signing home contracts rose in both May and June. But those increases didn't make up for a huge drop-off in April, when signings fell more than 11 percent. Over the past two months, signings have declined 2.5 percent.
Contract signings fell across most of the country. July's index fell 5.8 percent in the Northeast, 3.7 percent in the Midwest and 2.4 percent in the West. It rose 2.6 percent in the South.